Worksheet: Market Equilibrium - 2 | Economics Class 11 - Commerce PDF Download

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Q1: Market refers to an entire area where buyers and sellers of a commodity are in contact with each other, and sale/purchase takes place. It doesn’t refer to any particular area or place, and face-to-face contact is not necessary as transactions can be effected through ___________, letter, internet, or TV-shop.

Q2: Perfect competition is characterized by a large number of buyers and sellers selling __________ goods at a single uniform price.

Q3: In perfect competition, a firm is a price-taker because each seller has an insignificant share of market supply and cannot affect market supply by increasing or decreasing the quantity supplied. This results in a __________ price.

Q4: Homogeneous products are perfect substitutes or perfect standardized products that buyers do not distinguish from one firm to another, leading to infinite __________.

Q5: Perfect competition has __________ barriers to entry and exit, allowing firms to freely enter or exit the market.

Q6: In a perfect competition market, both buyers and sellers have __________ knowledge about the price and other market conditions.

Q7: Perfect mobility of factors in a market means that resources like energy, labor, and raw materials can move easily in and out of an industry without __________ barriers.

Q8: Perfect competition assumes that there are no extra __________ costs in transporting goods between firms.

Q9: In perfect competition, the demand curve is __________ to the x-axis, indicating that the firm can sell any quantity at the prevailing price.

Q10: In monopolistic competition, firms compete through both price and non-price competition, such as offering free gifts, services, and other attractive schemes to attract customers, without changing the __________ of their products.

Assertion and Reason Based

Q1: Assertion: In perfect competition, a firm is a price-taker.
Reason: Each seller has a significant share of market supply.
(a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
(b) Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
(c) The assertion is true, but the reason is false.
(d) The assertion is false, but the reason is true.

Q2: Assertion: In a monopoly, there is a single seller and no close substitute for the product.
Reason: The monopolist can control the market price and earn supernormal profits.
(a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
(b) Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
(c) The assertion is true, but the reason is false.
(d) The assertion is false, but the reason is true.

Q3: Assertion: Oligopoly is characterized by a few large firms in the market.
Reason: In oligopoly, firms compete independently without considering the actions of other firms.
(a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
(b) Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
(c) The assertion is true, but the reason is false.
(d) The assertion is false, but the reason is true.

Q4: Assertion: Monopsony refers to a market situation where there is a single buyer.
Reason: Monopsony typically arises in industries that require advanced technology.
(a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
(b) Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
(c) The assertion is true, but the reason is false.
(d) The assertion is false, but the reason is true.

Q5: Assertion: A natural monopoly occurs due to significant economies of scale.
Reason: In natural monopolies, barriers to entry are low, allowing many firms to compete.
(a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
(b) Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
(c) The assertion is true, but the reason is false.
(d) The assertion is false, but the reason is true.

Very Short Answer Type Questions

Q1: Explain the term "homogeneous goods" in the context of perfect competition.

Q2: What is the primary implication of perfect mobility of factors of production in a market?

Q3: Define "price discrimination" in the context of monopoly and provide an example of it.

Q4: Why is the demand curve in a monopoly downward-sloping?

Q5: Give an example of a differentiated product in the context of monopolistic competition.

Q6: What is the primary factor that leads to mutual interdependence among firms in oligopoly?

Q7: Describe an industry where a natural monopoly is likely to occur.

Q8: What are some barriers to entry in an oligopolistic market?

Q9: Explain the concept of "indeterminate demand curve" in oligopoly.

Q10: How does a cartel operate in the context of oligopoly?

Short Answer Type Questions

Q1: Describe the features of perfect competition. Explain how these features lead to the determination of a uniform price in the market.

Q2: Compare and contrast monopolistic competition and perfect competition, highlighting their similarities and differences.

Q3: Discuss the characteristics of a monopoly market. Explain how a monopoly firm has full control over the price of its product.

Q4: What are the key features of an oligopoly market? Explain the concept of mutual interdependence among firms in an oligopoly.

Q5: Explain the factors that lead to the emergence of a natural monopoly. Provide an example of a natural monopoly.

Q6: Discuss the concept of price rigidity in oligopoly. Why do oligopolistic firms tend to avoid changing their prices?

Q7: Differentiate between monopsony and oligopsony. Provide examples of industries where these market structures are commonly found.

Q8: Explain the concept of a cartel in oligopoly. Discuss the motives and implications of firms forming a cartel in the market.

Long Answer Type Questions

Q1: Discuss the concept of monopsony, including its characteristics and implications for the market. Provide real-world examples of monopsonistic markets.

Q2: Analyze the factors that lead to the emergence of monopoly or oligopoly in markets. Highlight the role of innovations, control of essential resources, and successful differentiation in shaping these market structures.

Q3: Examine the role of government policy, patents, and anti-trust legislation in shaping market structures. Discuss how these factors can influence the degree of competition in an industry.

Q4: Compare and contrast the various forms of market structures, including perfect competition, monopolistic competition, monopoly, oligopoly, monopsony, and oligopsony. Highlight their key characteristics, implications, and real-world examples.